Q3 2021 American Shared Hospital Services Earnings Call

Good afternoon, and welcome to the American shared hospital services third quarter 2021 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after today's presentation there'll be an.

To ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded.

I'd now like to turn the conference over to Stephanie Prince of P. C. G Advisory. Please go ahead.

Thank you Carrie and thank you to everyone joining us today before turning the call over to management I would like to make the following remarks concerning forward looking statements. Please note that various remarks that may be made on this conference call about future expectations plans and prospects for the company constitute forward looking.

Statements for the purposes of Safe Harbor provisions under the private Securities Litigation Reform Act of 1995 actual results may vary materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the company's filings.

With the SEC. This includes the company's annual report on Form 10-K for the year ended December 31, 2020, the quarterly report on Form 10-Q for the quarters ended March 31, and June 30, 2021 and the definitive proxy statement for the annual meeting of shareholders that was held on June two.

'twenty five 2021 the company assumes no obligation to update the information contained in this conference call I would now like to turn the call over to race to covey as CEO of a M S right.

Great. Thank you Stephanie.

Yes.

Good afternoon, everyone.

Thanks for joining us today for our third quarter 2021 earnings conference call.

I'll begin with some opening remarks.

And then it will mix it up a bit from our usual order and have Alexis Wallace, our chief accounting officer provide a financial review.

After that Craig's a dollar our president.

Oh, and CFO, who will provide an operational review of results.

Following their prepared remarks.

Myself, Craig Alexis and Ernie Bates, our senior Vice President sales and business development and International operations, We'll open the call for your questions.

In the third quarter.

MFS continued to be impacted by COVID-19.

As well as unplanned downtime.

Of our proton beam system.

Total revenue decreased 12% year over year.

Cost continued to decline from the positive impact.

Of our year end balance sheet restructuring.

And the debt refinancing that we completed in April.

Operating income was $186000.

The third consecutive positive quarter.

Reagan and Alexis will go into the details in a few months.

With our financial House tightened up.

And expanded radiation therapy equipment offerings in place.

We turn to expanding our addressable market.

During the quarter, we announced an agreement.

For business development services.

Which will expand our sales and marketing efforts.

All federal facilities in the United States.

This includes all veteran affairs VA hospitals.

And department of Defense hospitals.

Which include many of our country's most sustained facilities.

We continue to have substantial resources to invest in future opportunities.

We have over $7 million in cash and a $7 million line of credit.

We're ready to put these resources to work now.

I look forward to discussing our progress in the months to come.

I'll now turn the call over to Alexis.

For the third quarter financial review.

Alexis.

Thank you Ray and good afternoon, everyone.

Before I begin my prepared remarks, and like to call your attention to our third quarter earnings press release that was issued earlier this morning.

You need a copy it can be accessed on our website at <unk> Dot com at press releases under the investors tab.

Now turning to our third quarter results.

For the three months ended September 30th 2021 revenue decreased 12, 2% to 4.099 million compared to revenue of $4 million and 670000 for the third quarter of 2020.

Third quarter revenue for the company's proton therapy system installed at Orlando Health in Florida decreased 23, 4%.

1.293 million compared to revenue for the third quarter of 2000 $21 million 687000.

Total proton therapy fractions in the third quarter were 973 a.

A decrease of 44% compared to 1632 proton therapy fractions in the third quarter of 2020.

Revenue for the company's gamma knife operations decreased five 9% to 2.806 million for the third quarter of 2021 compared to 2.983 million for the third quarter of 2020.

Gamma knife procedures decreased by 10, 9% to 336 for the third quarter of 2021 from $3 seven 377 in the same period of the prior year.

Gross margin for the third quarter of 2021 increased 28, 9% to $1 million 467000, or 35, 8% of revenue compared to gross margin of 1.138 million or 24, 4% of revenue for the third quarter of 2020.

Selling and administrative costs decreased by one 4% to 1.119 million for the three months period compared to $1 million 135000 for the same period in the prior year.

Due to lower legal accounting and tax fees.

And just expense decreased 36, 2% to 162000 compared to 254000 for the same period in the prior year.

Operating income for the third quarter of 2021 was 186000 compared to an operating loss of 251000 in the third quarter of 2020, a positive swing of 437000.

Net income in the third quarter was 33000 or one cent per diluted share compared to a net loss of 209000 or <unk> <unk> per diluted share for the third quarter of 2020.

Fully diluted weighted average common shares outstanding were $6 million 123000.

6.049 million for the third quarter of 2021 and 2020, respectively.

Adjusted EBITDA and non-GAAP financial measure was 1.562 million for the third quarter of 2021.

Compared to 1.979 million for the third quarter of 2020.

At September 30th 2021, cash cash equivalents and restricted cash was $7 million 168000 compared to $4 million 325000 at December 31 2020.

Shareholders' equity at September 30th 2021 was $23 million 953000, or $4 eight per outstanding share.

This compares to shareholders' equity at December 31, 2020 of $23 million 650000, or $4 eight per outstanding share.

I'll now turn the call over to Craig for the third quarter operational overview.

Craig.

Thank you Alexis and good afternoon, everyone.

As the Lexus mentioned total revenue in the third quarter was $4 1 billion.

12, 2% decline from last year.

The decline reflects the slow recovery from Covid exacerbated by this summer's Delta Varian as well as unexpected downtime of our <unk> system.

Third quarter revenue from the proton therapy system installed at Orlando Health in Florida was $1 3 billion a year over year decrease of 23, 4%.

The lower volumes were offset by higher average reimbursement perfection.

Total proton therapy fractions declined by a little over 40% to 973.

This was primarily due to the continued impact of COVID-19 is treatment volumes continue to lag from pre pandemic levels. The downtime required repairs certain of the systems components.

Gamma knife revenue decreased five 9% to $2 $8 million.

The decline was due to a decrease in procedures offset by an increase in the average reimbursement.

The increase in average reimbursement resulted from the expiration of a contract in the fourth quarter that was reimbursed at a lower rate as well as an increase in the average rate at the company's retail sites.

Gamma knife procedures decreased by 10, 9% to 336.

Third quarter, primarily due to the exploration of one contract in the fourth quarter of 2020 and another contract in the first quarter of 2021, both high volume customers.

On a same store basis gamma knife revenues again light volumes.

First name centers in operation increased 11, 6% from gamma knife volumes for those same centers during the same period of the prior year.

Gross margin increased 29% to $1 5 million.

<unk> to $1 1 billion for the 2023rd quarter.

The increase was primarily due to a 32, 7% decrease in depreciation and amortization.

The result of the yearend balance sheet restructuring as well as the one contract exploration Corp, second fourth quarter 2020, and one in.

First quarter 2021.

Other direct operating cost decreased 26, 4%, primarily due to the one contract exploration in the first quarter of 2021 and a decrease in operating cost for the company's existing retail sites.

The gross margin percentage was 35, 8% in the current quarter compared to 24, 4% in the third quarter a year ago.

And was essentially even with the second quarter 2021 level of 35, 9%.

Selling and administrative costs decreased by one 4% to $1 1 million due to lower legal accounting and tax fees.

Interest expense decreased 36, 2% to 162000 compared to 254000 for the same period in the prior year.

This decrease reflects the benefit from the April refinancing of the majority of our existing debt and finance lease portfolio at a lower effective interest rates in the company's historic portfolio rate.

Operating income for the quarter was 186000 compared to an operating loss of 251000 in the third quarter of 2020.

This was a positive swing of 437000 and reflects the lower direct operating costs and interest expense.

As Ray mentioned operating income was positive for the third consecutive quarter with the restructuring refinancing and other cost initiatives. We believe that this trend is sustainable.

We recently received 2022 reimbursement rates from the centers for Medicare and Medicaid.

The delivery code reimbursement rate for Medicare Gamma knife treatment has been set at approximately 7943, an increase of two 2% from the 2021 right.

7773.

The approximate CMS real bereavement rate for delivery of PBR team for a simple treatment without compensation will be $554.

2022 compared to $543 in 2021.

$1321 compared to $1298 in 2021 for simple was compensation intermediate and complex treatments respectively.

In the fourth quarter, we expect to complete a cobalt 60, reload and software upgrades for a customer who recently extended their contracts of five years.

In the third quarter, we signed another contract extension as well.

The upgrade at Gamma knife Center in Ecuador is now expected to be completed in mid 2022.

It will be one of the few gamma knife units in all of South America.

We continue to have many discussions with existing and potential clients.

Did radiation therapy system projects.

This concludes the formal part of our presentation.

Jerry we'd like to now turn the call back over to you for questions.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to us.

Symbol our roster.

Again, if you have a question. Please press Star then one.

Star then one if you wish to ask a question.

Okay.

Yeah.

Once again, if you'd like to ask a question you can press Star then one at this time.

Yeah.

Okay. Gary this is race to Kodiak.

I'd like to thank everyone for joining us today.

With our expanded marketing program and other plans and development work confident about <unk> future.

Please contact directly.

Contact us directly if you have any questions before the year end conference call in mid March.

Please be well and stay safe.

Goodbye.

The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect your lines have a great day.

Yeah.

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